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Flashcards in Government and the Economy Deck (21):
1

Define progressive taxes.

higher rate on higher incomes

2

define proportional taxes.

same rates for all tax payers
"Flat Tax"

3

define regressive taxes

larger rate on lower incomes
-Portion of income for taxes falls as income rises

4

define budget deficit

occurs when the government spends more than it brings in

5

define balanced budget

when revenue equals expenditures

6

define discretionary spending

-government spending implemented through a bill.
about 1/3 of the national budget

7

define mandatory spending

-Spending on certain programs that are required by existing law
1/2 of all federal spending and includes entitlements (food stamps, medicare, etc.)

8

Define budget surplus

occurs when the government takes in more than it spends

9

define National debt

the total amount of money a government owes

10

define deficit spending

practices of spending more than what is taken in for a specific budget

11

reserved requirement ratio

The portion (expressed as a percent) of depositors' balances banks must have on hand as cash.

12

discount rate

the minimum interest rate set by the Federal Reserve for lending to other banks

13

what is the government doing when it issues bonds?

borrowing money from citizens

14

How can the government slow down the economy?

using a contractionary tool

15

how can the government expand the economy?

using an expansionary tool

16

What are public goods and services?

provided by givers and consumed by the public as a whole

17

What are examples of automatic stabilizers?

public transfer system, progressive income taxes

18

What are 4 examples of deficit spending?

-National Emergencies (wars, natural disasters)
-Public Goods and Services
-Stabilization of the Economy
-Entitlements

19

What is the difference between contractionary fiscal policy and expansionary fiscal policy

contractionary try to reduce demand and slow the economy, and expansionary try to increase demand and stimulate the economy.

20

What is the difference between national debt and deficit spending?

national debt is the total amount of money the government owes and deficit spending is the practice of spending more than what is taken in for a specific budget year

21

What happens when monetary policy coordinates well with the business cycle?

provides a stable economic environment